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Ad agencies now tossing dollars that can fund news into the future. But, Old Media not moving to make the catch. 3/26/08

Posted by Steve Boriss in Advertising revenues.

The good news: USA Today says advertisers in the next 4 years will increase spending on new media by 82%, and it will account for 27% of all marketing expenditures. Given the lower cost structure of the Internet, that means there ought to be plenty of money to fund online news outlets. So, what’s the bad news? Bloomberg reports that ad spending on Old Media continues to drop sharply, putting the news business into a deeper state of depression, both financially and emotionally. But why is this bad news? The mainstream outlets are the ones with the leading brand names and their self-proclaimed superiority for truth-telling and objectivity. All they need to do is leverage their advantages to succeed online and — bada bing! — problem solved.

But what is becoming increasingly obvious to all but the mainstream media is that they are refusing to make the changes needed for online success. Although their audiences are abandoning them in favor of online outlets that neither promise nor reliably deliver truth and objectivity, mainstream outlets have dug in their heels and will not abandon their failing model. Although it is becoming obvious that newspapers will need to deliver more and more original content, particularly at the local level, the Tribune is poised to dump at firesale prices the potential goldmine that is Newsday, which provides local, original content for an affluent Long Island audience, in favor of squeezing out a few more bucks from its dinosaur big city papers. In baseball, when one player throws, the other sometimes must move to catch the ball. Advertisers are beginning to throw money. Mainstream outlets that do not move to catch it cannot possibly win. And from what we are seeing, it would now be foolish to bet on the home team.


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